Indonesia concludes FTA negotiations with Australia

Published: 2018-09-20

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Introduction

On August 31, the Government of Indonesia (GOI) and Government of Australia (GOA) announced the conclusion of trade negotiations under the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA). IA-CEPA builds on an existing free trade agreement, the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA), further reducing tariffs and providing additional cooperative mechanisms for addressing non-tariff barriers and import licensing.

Perhaps the most significant feature of the agreement is not related to a reduction in duties or quota allotments for various products, but rather that Indonesia will “guarantee automatic issue of import permits for key products.” It is unclear if this automatic issuance of import permits refers only the Ministry of Trade issued SPIs (Import Permit) or if it also extends to the Ministry of Agriculture RIPHs (Import Recommendation).

The agreement is still pending final translation, review, and approval by both countries. The table below shows initial outcomes for selected products and comparable tariffs or barriers for U.S. origin products.

Citrus: Seasonally, Australian mandarins and oranges do not compete with U.S. varieties. Lemons, which are a less seasonal citrus, may see a preference under the duty free quota, though the U.S. only exported about $1 million of lemons to Indonesia in 2017. The current five percent duty for U.S. citrus is only a minor barrier compared to numerous import licensing and non-tariff barriers that have been imposed by Indonesia and remain a point of contention for U.S. citrus market access.